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What if the recession predictions are wrong? That’s the possibility investors faced in the middle of last week, bidding stocks broadly higher in response. While the full week gave investors guidance from a series of corporate profit reports, Wednesday also brought information on consumer retail sales. Buying beyond analyst estimates, consumers appear to be healthier than expectations. For the full week, our Quad-City Times Key 15 gained 38.60 to 1,399.84.

The U. S. Commerce Department delivered this better sales data, reporting that January sales climbed 0.3 percent over December, compared to consensus estimates of a 0.3 percent decline. But what do the numbers mean?

We all know retail sales are not really higher in January than in the busy holiday shopping season of December. The Commerce Department tries to normalize the data by comparing January not with December, but with a normal “seasonally adjusted” month-to-month change. So the new report says that if you took a historically normal decline from December to January, this year was 0.3 percent better than that decline.

But there are other variables at work that don’t get factored in. One is weather and how we respond on warmer, colder, clear or snowy days. Another variable is that the high number of gift cards given during the holiday season are now being redeemed and counted toward January sales.

So, just how good was January? Compared to January 2007, total retail sales were up 3.9 percent. Even keener insight comes from “core retail sales.” Here we exclude gasoline (up in price in the past year), autos and building materials, which we rarely buy as individuals. Remaining is mostly what you and I would call general merchandise. Core retail sales were up 3.6 percent over last January, says the Commerce Department. That’s healthy, though more modest growth than seen in the early months of 2007. It’s growth, but slower growth. And investor response last week was to expect that growth to continue.

Better than expected, too, were Deere’s quarterly results. Out early Wednesday, Deere posted total sales up 18 percent to $5.2 billion, and profits up 59.6 percent to 83 cents per share, beating analyst consensus estimates.

For that first quarter, ending Jan. 31, equipment sales were up 19 percent. Farm equipment alone was up 33 percent, helped by a farming boom that is producing more food and fuel. Deere’s outlook is for more modest, but very healthy growth of 23 percent for the current second quarter, seasonally the planting season and strongest sales quarter.

Just focusing on farm equipment, Deere’s operating profit climbed from $137 million to $332 million.  The forecast is for a 28 percent full year increase in sales. For the U.S. and Canada, Deere sees 15-20 percent sales growth, with large tractors and combines the strongest. Deere shares were up 2.54 to 85.00 for the week, but up 49 percent from one year ago.

HNI Corporation’s dividend also is up. HNI, the parent of HON office furniture operations in Muscatine, Iowa, declared its 212th consecutive quarterly dividend. HNI also increased that cash payout by 10 percent to 21.5 cents per share, payable on Feb. 29, the leap year extra day. HNI shares gave up .48 to 30.48.

Finally Monsanto (b) pleased investors by posting an increased profit outlook this leap year. From an earlier $2.50 to $2.60 range, the agribusiness seed and herbicide firm raised its outlook to a $2.70 to $2.80 range. Monsanto cited “increased confidence” in its outlook and “continued strong performance” for Roundup and other herbicides, manufactured right here. Monsanto shares finished up 5.43 to 115.35 last week.

For the week ahead, investors can enjoy a Presidents Day with markets closed Monday, then move on to the important consumer inflation reports on Wednesday. And they’ll continue to ponder, what if the recession predictions are wrong?

 Jim Victor is senior vice president-wealth management and financial advisor for Smith Barney, Davenport. Smith Barney is a division and service mark of Citigroup Global Markets Inc. and its affiliates and is used and registered throughout the world. The information contained herein has been obtained by the writer from sources believed to be reliable, but he does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. a) The firm is a market maker in the publicly traded equity securities of this company. b) Within the past 3 years, Citigroup or its affiliates has acted as manager or co-manager of a public offering of securities of this company.